Germany hesitates on military spending


German Chancellor Olaf Scholz speaks ahead of the weekly cabinet meeting in Berlin on April 27.


Photo:

SWIMMING POOL/REUTERS

German Chancellor Olaf Scholz promised two months ago to substantially increase defense spending. Where is that money now? Funny you ask, since Mr. Scholz’s dithering over his signing promise is a growing controversy in Berlin.

The “turning point” speech that Mr. Scholz delivered on February 27 included two promises: to increase the annual military budget to at least 2% of GDP, in line with the objectives of the North Atlantic Treaty Organization, and to create an envelope single 100 billion euro ($105 billion) special fund for purchases. Basically, the supply fund would be exempt from the constitutional limit on public debt, although the regular military budget would not.

The great danger was, and remains, that the pacifist wings of the three-party coalition government—Mr. Scholz’s Social Democrats (SPD), Greens and Liberal Democrats (FDP) would weaken this commitment by wasting money on non-defence projects such as renewable energy or foreign aid. The best news of the past two months is that Berlin is resisting this temptation so far.

The government said in mid-March it would use the special fund to purchase 35 F-35 jets from the United States to replace obsolete fighters and meet Germany’s obligations under the sharing agreement. NATO nuclear. Defense Minister Christine Lambrecht stressed the need for disciplined investment in capabilities.

Yet Mr. Scholz struggles to say what he meant by his twin promises. His February speech failed to specify whether he meant he would spend 2% of GDP more 100 billion euros, or if it would spend 2% of GDP including the 100 billion euros. Distinction matters.

Meeting the 2% target would mean annual defense spending of around €75bn in the next financial year, but Mr Scholz’s government has presented a budget of just €50bn, roughly the same amount as before the “turning point”. The plan seems to be to supplement the annual expenses by including a quarter of the special supply budget.

This stuff has the makings of a big mistake. An immediate problem is that if the regular budget is not increased with the supply campaign, the German army could find itself without the resources – especially manpower – to operate and maintain its new equipment.

Previous efforts have been hampered by annual budgeting that made planning for the many years required for an advanced procurement program impossible. It could be counterproductive to require Parliament to spend €25 billion a year out of the €100 billion fund to meet the 2% target.

Meeting the 2% target under the regular budget — which cannot be easily financed by debt — would require Berlin to commit to paying it, preferably by cutting spending in other areas. It will be politically difficult, but it would bolster the higher defense budget. If Berlin uses the special supply fund as a top-up to reach 2%, Germany’s allies will not trust Berlin to meet its target once the fund is exhausted.

This debate is only partially about Germany’s military capabilities, important as they are. It’s also about Berlin’s credibility. Mr Scholz promised in February that Germany would become a reliable ally by reversing decades of defense cuts. His government must now show it means what it said about a turning point, instead of resorting to budget tricks to fall back into Berlin’s bad habits.

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